What are merchant services for small businesses?

Merchant services for small businesses and entrepreneurs help them accept credit card payments and checks with a merchant account. A merchant account is basically similar to an “indirect bank account” where deposits can be made directly from third parties, such as customers who buy goods or services using their debit cards. Merchant service providers will typically require you to provide reference information about your business in addition to the standard personal information. Once approved, the merchant account provider will contact you for more information before actually opening up your merchant account.

Who can get a merchant services account?

Generally speaking, any small business with an operational website, brick-and-mortar store, or any other physical location is considered eligible for a merchant account. The only real exceptions are businesses that don’t actually receive money in some form or another (such as donations), and adult-themed websites.

Why is getting a merchant services account important?

Aside from the convenience of accepting credit card payments, there’s also the fact that certain types of purchases can only be made using credit, debit, or check. Online business is growing at an enormous rate around the world. According to Internet Retailer Magazine’s Top 500 Guide for 2010, there were $186 billion USD worth of online sales during the 2009 holiday season alone. With numbers like that, it’s easy to see why getting a merchant services account will benefit you.

How do you get a merchant services account for your small business?

It’s actually very easy these days to apply for an online merchant account. There are literally hundreds of providers who will provide you with the services you need without too much hassle at all. Most reputable company websites will have links on their home pages that direct you to the merchant services page. It’s also very common for small business owners to get merchant services online, since major credit card processors like American Express, Discover Financial Services, and Visa USA offer dedicated websites that specifically cater to merchants.

What does it cost?

The cost of a merchant account can vary greatly depending on how you plan to accept payments (automated vs. manual) and also your business type, i.e., if it’s brick-and-mortar or strictly online. According to the Federal Reserve Board, service providers can charge up to five percent of each transaction for Visa or MasterCard transactions, while American Express only allows for three percent per swipe (or four percent in some cases).

Also, it’s important to remember that the cost of accepting credit cards is not just limited to what you pay in fees. You’ll also have additional expenses for things like buying or leasing equipment, software, and hiring personnel in order to operate your business properly.

What advantages are there with online merchant services?

The main advantage of getting a merchant services account through an online provider is that it’s much easier since you can apply from the comfort of your home or office. Some service providers also offer virtual terminals for instant processing, customer accounts where you can manage billing information, and product catalogs to provide professional-looking websites. Many will even allow you to accept eChecks, so you can get paid almost as fast as you sell your product or service.

How can I compare merchant services accounts?

It’s actually very easy to compare online payment service providers since most offer free trials that allow you to try out their service at no cost. Others only require a small application fee ($20 to $50), which is usually refunded within the first thirty days if you decide not to go with that service provider. All reputable merchant services companies also have online quotes, so it’s easy to compare prices and features based on what your business needs are.

The Federal Reserve Board states many guidelines for merchant services providers, both debit and credit, indicating that all fees must be clearly disclosed to merchants, along with rates charged to consumers.

It is advised however, to take advantage of free trials for merchant services so you can test out the features beforehand, ensuring you are satisfied with your choice. While it may seem tedious, doing research on credit card processing companies will benefit you in the long run, since you will have the best scenario in place for your business or online venture.

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